Mr. Ace Ankomah, Investment lawyer and Head of Litigation & Dispute Resolution at Bentsi-Enchill, Letsa & Ankomah Ghana, has cautioned that the most appropriate time to consider enforcement of court decisions in times of contract default is at the initiation stage or when the deal is being signed. It should not be at the start of court proceedings, or when litigation is concluded or when judgment has been obtained; for one might just find out that there is virtually nothing to enforce against. Speaking on Credit Impairment Management, Default and Disputes at an international African Banking and Financial Institutions Seminar in Accra, organized by the First Vault Group UK, Ace Ankomah said it is very important for businesses and individuals seeking to partner Ghanaians in any business transactions to be very conversant with the local legal regime to avoid long drawn-out litigation in case of default. He said the courts for instance, do not enforce civil judgments automatically and it is the successful party in litigation who must decide where and when to enforce a judgment. “My respectful submission is that the time to consider enforcement is when the deal is being worked on, before any money is disbursed; because often success in litigation or debt recovery is based on what the clients did at the negotiation stage, the status of the documentation, the express terms, the nature of the security etc.” He said a usual question to ask at the initiation of litigation is whether the debtor is worth suing because in many trans-border transactions that need to be enforced, “you don’t get enforcement because you find that the debtor is a man of straw. He has disbursed the money, used it and there is nothing to enforce against.” He said if the debtor is not worth suing, the enforcer may “just be sending good money after bad”, and should the enforcer insist, some lawyers may even charge their fees upfront. “As a litigator, before I file, I will look at the debtor. If I think the debtor has something then I might negotiate my fees on the basis of a contingency - that if I win, I get my percentage. But if I look at the debtor and I see fundamental problems like address and you don’t even have a proper address of the person who owes you, then I’m likely to charge my fees upfront…” He said whereas locating the debtor is key, in Ghana however, a curious feature of newspaper publications is substituted service and a large majority of such publications emanate from the banks which accept postal addresses and take residential addresses that they’ve never vetted, “and so when the borrower defaults, they can’t even find the borrower to serve the borrower, they can’t even find the guarantors.” He said other key issues to consider at the transaction stage include choice of forum and law, for while the borrower may be in Ghana, some parties strangely may decide to choose the court of New York or some other international court and law for settlement upon default, which has its own inconveniences. “Remember that if you sue in Ghana, the defendant is likely to ask for security for cost, which means that in the event of you (foreign partner) losing the matter, this money would be used to pay the costs of the defendant. The law is that once you don’t reside in the jurisdiction and you don’t have any assets in the jurisdiction the courts are very likely to ask you to deposit security. A (local) bank guarantee is often preferred.” He said more often than not, default disputes end up in trials, which then requires the aggrieved party to send somebody to Ghana to testify which also come with flight cost, hotel cost, witness prepping and cost a lot of time. “Remember that even when you win there is the right of appeal which is in every jurisdiction, and there is an appeal and a motion for stay of execution which are likely to happen.” Another important issue is security cover for the loan facility and who is providing the security. He said while adequate local knowledge may not prevent disputes in themselves or make the transactions default-free, it is a sure way of clearing up the pitfalls that may arise, and must therefore inform which clauses go into the agreement at the drafting stage. The seminar, the first in an annual Endeavour, targeted a cross section of senior African banking and financial executives across a wide range of multiple financial institutions including banks, private equity, wealth management, pension funds as well as non-bank financial institutions. It aimed at improving standards through effective knowledge exchange between developing and developed markets, create an effective hub for networking and deal facilitation, identify new growth opportunities for enhancing profitability and build sustainable institutions in the aftermath of the global financial crisis. It was supported by the Ministry of Finance and Economic Planning; DentonWildSapte; Reuters; exporta; Fitch Ratings and Fitch Solutions; CQS; ACL; Cal Bank; SSNIT; African Banker; emeafinance; the Ghana Stock Exchange; Bearing; Joy Online; Multi TV and Joy FM among a host of others. Story by Isaac Yeboah/Myjoyonline.com/Ghana